Ravindra N. Sakla, Pune V. Additional Commissioner of Income-tax,

ITA 1471/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7357 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Salary income; Earning of tax free income; Retrospective amendment
• Section: 143(3); 14A; 32

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1471/PUN/2015 [ [ / ASSESSMENT YEAR : 2009-10 SHRI RAVINDRA N. SAKLA, OFFICE NO.1-5, MILLENNIUM STAR, DHOLE PATIL ROAD, PUNE 411 001. PAN : ACEPS2235F. . / APPELLANT V/S ADDL.COMMISSIONER OF INCOME TAX, RANGE 2, PUNE, PMT BUILDING, SWARGATE, PUNE 411 037. . / RESPONDENT ASSESSEE BY : SHRI NEELESH KHANDELWAL REVENUE BY : SHRI AJAY MODI / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A)-II, PUNE DT.29.10.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INCOME FROM SALARY, BUSINESS AND PROFESSION, HOUSE PROPERTY AND OTHER / DATE OF HEARING : 21.09.2017 / DATE OF PRONOUNCEMENT: 16.10.2017 2 SOURCES. ASSESSEE FILED HIS RETURN OF INCOME FOR AY 2009-10 ON 30.10.2009 DECLARING TOTAL INCOME OF RS.4,66,00,910/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 30.12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.5,19,24,359/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.29.10.2013 (IN APPEAL NO.PN/CIT(A)_II/ADDL.CIT, R-2, PN/292/2011-12) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND: THE L EARNED ASSESS I NG OFFICER MADE ADDITION OF RS . 38 , 69 , 583/- UNDER SECTION 14A OF THE INCOME TAX ACT , 1961 READ WITH RULE 8D OF THE INCOME RULES 1962 ON THE GROUND THAT THE APPELLANT I S I N RECEIPT OF I NCOME IN FORM OF SHARE OF PROFIT FROM VA R IOUS PARTNERSHIP FIRMS WHICH DOES NOT FORM PART OF INCOME AND THE APPELLANT HAS INCURRED EXPENDITURE AMOUNTING TO RS .1 2 , 63 , 253/ - TO EARN THE EXEMPT INCOME. THE LEARNED ASSESSING OFFICER DISALLOWED A SUM OF RS . 38 , 69 , 583 AS AGAINST THE EXPENDITURE I NCURRED TO THE TUNE OF RS . 12 , 63 , 253/ - . ON THE FACT AND I N THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONOURABLE CIT (A ) ERRED IN CONFIRMING THE PART OF THE ADDITION TO THE TUNE OF RS . 12 , 63 , 253/- UNDER SECTION 14A OF THE INCOME TAX ACT , 1961 WITHOUT APPRECIATING THE FACTS OF THE CASE IN PROPER PERSPECTIVE . THE APPELLANT HEREBY PRAYS THAT THE ADDITION MAY PLEASE BE DELETED. 3. THE CASE FILE REVEALS THAT THE DUE DATE FOR FILING OF APPEAL WAS 21.03.2014 BUT THE SAME WAS FILED ON 09.11.2015 RESULTING INTO DELAY OF 598 DAYS. ASSESSEE HAS FILED AN AFFIDAVIT WHEREIN THE REASONS FOR DELAY HAVE BEEN STATED AND IT IS FURTHER STATED THAT THE DELAY IN FILING WAS NOT DUE TO ANY MALAFIDE INTENTION WHICH IS EVIDENCED BY THE PAYMENT OF APPEAL FEE WELL WITHIN THE TIME OF FILING THE APPEAL. THE LD.A.R. THEREFORE SUBMITTED THAT THE DELAY IN FILING THE APPEAL BE CONDONED. LD.D.R. OBJECTED TO THE PRAYER FOR CONDONATION OF DELAY. WE HAVE HEARD THE RIVAL 3 SUBMISSIONS. CONSIDERING THE AVERMENTS MADE BY THE ASSESSEE IN THE AFFIDAVIT AND IN THE INTERESTS OF JUSTICE, THE DELAY IN FILING THE APPEAL IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE, AO NOTICED THAT ASSESSEE HAD MADE SUBSTANTIAL INVESTMENT IN PARTNERSHIP FIRMS AND THE RECEIPT OF SHARE OF PROFIT WAS EXEMPT FROM TAX. HE ALSO NOTICED THAT ASSESSEE HAD ALSO MADE INVESTMENTS IN VARIOUS COMPANIES AND THE DIVIDENDS FROM THOSE COMPANIES WERE EXEMPT FROM TAX. HE FURTHER NOTICED THAT ASSESSEE HAD ALSO INCURRED AGGREGATE INDIRECT EXPENDITURE OF RS.48,19,197/-. THE ASSESSEE WAS THEREFORE ASKED TO EXPLAIN AS TO WHY THE DISALLOWANCE UNDER SEC.14A R.W. RULE 8D NOT BE MADE. ASSESSEE INTER-ALIA SUBMITTED THAT THE INVESTMENTS IN PARTNERSHIP FIRMS WERE OUT OF INTEREST FREE FUNDS AND IT WAS FURTHER SUBMITTED THAT IF RULE 8D IS APPLIED FOR WORKING OUT OF THE DISALLOWANCE, THE TOTAL DISALLOWANCE WOULD WORK OUT TO MORE THAN THE TOTAL EXPENDITURE INCURRED (EXCLUDING DEPRECIATION). IT WAS THEREFORE SUBMITTED THAT NO DISALLOWANCE U/S 14A BE MADE. WITHOUT PREJUDICE IT WAS SUBMITTED THAT IF THE TOTAL EXPENDITURE INCURRED (EXCLUDING DEPRECIATION OF RS.12,63,253/-) IS APPORTIONED ON THE BASIS OF EXEMPT INCOME EARNED, THE DISALLOWANCE U/S 14A WORKS OUT TO RS.10,45,848/- AND IF RULE 8D IS APPLIED, THE DISALLOWANCE WOULD WORKS OUT TO RS.38,69,583/- WHICH IS MORE THAN THE TOTAL EXPENDITURE (EXCLUDING DEPRECIATION INCURRED BY THE ASSESSEE). IT WAS THEREFORE SUBMITTED THAT THE DISALLOWANCE OF TOTAL EXPENDITURE BE 4 RESTRICTED TO RS.12,63,253/-. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. AO HAD OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING SEPARATE BOOKS OF ACCOUNTS, HAVING COMMON POOL OF FUNDS FOR HIS ENTIRE BUSINESS OPERATIONS INCLUDING THE BUSINESS WHICH WAS YIELDING EXEMPT INCOME. HE WAS THEREFORE OF THE VIEW THAT SEC.14A OF THE ACT IS APPLICABLE. HE ACCORDINGLY WORKED OUT THE TOTAL DISALLOWANCE UNDER SEC.14A R.W. RULE 8D OF THE ACT AT RS.38,69,583/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- 4.2 I HAVE DULY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE ASSESSING OFFICER AND ALSO PERUSED MATERIAL ON RECORD. THE APPELLANT IS IN RECEIPT OF INCOME WHICH DO NOT FORM PART OF THE TOTAL INCOME IN THE FORM OF DIVIDEND OF RS. 11,293/- AND SHARE OF PROFIT OF RS. 25,39,97,856/- FROM FIRMS WHERE HE IS A PARTNER. THE INCOME EARNED FROM THEM HAS BEEN CLAIMED EXEMPT. THE ASSESSING OFFICER HAS EXAMINED THE CLAIM OF THE APPELLANT THAT NO EXPENDITURE IN RELATION TO EXEMPT INCOME HAS BEEN INCURRED AND, THEREFORE, AFTER RECORDING ITS SATISFACTION ON THE CORRECTNESS OF THE APPELLANT'S CLAIM HAS PROCEEDED WITH THE D I SALLOWANCE U/S 14A R . W RU L E 8D. THE FINANCE ACT 2001 HAD INSERTED SECTION 14A IN THE I.T. ACT WITH RETROSPECTIVE EFFECT FROM 01.04.1962 I . E. A.Y. 1962-63 SO AS TO CLARIFY THAT NO DEDUCTION SHA L L BE ALLOWED IN RESPECT OF ANY EXPENDITURE INCURRED BY THE ASSEESEE IN RELATION TO INCOME WH I CH DOES NOT FORM PART OF THE TOTAL INCOME. THE , FINANCE ACT 2006, HAS INSERTED SUB-SECTION (2) AND (3) IN SECTION 14A AS SO AS TO LAY AT REST THE CONTROVERSY REGARDING A.OS POWER TO APPORTION EXPENDITURE FOR DISALLOWANCE. THE PROCEDURE FOR COMPUTATION OF DISALLOWANCE HAS THUS BEEN PROVIDED IN SUB-SECTIONS (2) AND (3) OF SECTION 14A, WHICH SEEKS TO ACHIEVE THE UNDERLYING OBJECT OF SECTION 14A(1) THAT ANY EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME SHOULD NOT BE A LLO WED AS DEDUCTION . T HE TERM ' EXPENDITU R E ' OCCU RR I NG I N SEC T ION 14A W OU L D THUS T AKE IN ITS SWEEP NOT ONL Y DI R ECT E X PEND I TUR E BUT ALSO AL L FORMS OF EXPENDITURE REGARD L ESS OF I TS FORM . EVEN IF AN EXPEND I TURE IS A L LOWABLE AS HAS BEEN CONTENDED BY THE APPELLANT IN V I EW OF , T HE DEC I SION . C IT ED IN THE CASE OF RELIANCE POWER & U T I L ITIES LTD. ( SUPR A ) UN D ER ANY PROVISION OF THE ACT , T HE LANGUAGE OF SECT I ON 14A FOR D I SA LL OWANCE OF SUCH EXPENDITURE ARE DIFFERENT . PROVISIONS OF SECTION 14A ARE CO N TRO L LING T HE COMPUTA T IO N OF INCOME AND OTHER PROVISIONS OF THE ACT AND HAVE THE SUPERVENING EFFECT . O V ER OTHER PROV I S I ONS. THEREFORE , EVEN IF THE EXPENDITURE ' WAS ALLOWAB L E UNDER ANY PROVISIONS OF THE ACT IT HAS TO SUFFER THE DISALLOWANCE BECAUSE OF THE OVERRID I NG EFFECT OF SECTION 14A ' BE THAT SECTION 36(1)(III) OR SECTION 57 . FURTHER , THE APPELLANT HAS NOT 5 KEPT THE FUNDS IN SEPARATE ACCOUNTS IN THE PROCESS OF I TS UT I LIZATION , RATHER THE SAME IS M I XED AND THE APPELLAN T HAS NOT BEEN ABLE TO DEMONSTRATE THE ABOVE ASPECT BY WAY OF A CASH FLOW STATEMENT TO JUSTIFY THA T THE SAID EXPENSES HAVE NOT BEEN INCURRED I N RELATION TO EARNING OF TAX F R EE INCOME. THUS AS ALREADY SEEN, SUB-SECTION (3) OF SECTION 14A MAKES IT CLEAR AND PROVIDES FOR THE APPL I CATION OF SUB - SECT I ON (2) ALSO TO A SITUATION WHERE THE ASSESSEE C L AIMS THAT NO EXPEND I TURE HAS BEEN INCURRED , BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTA L INCOME UNDER THE ACT . THE DETERMINAT I ON OF THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO ' EXEMPT I NCOME SHOULD BE IN ACCORDANCE W I TH SUCH METHOD AS MAY BE PRESCRIBED . AS A CONSEQUENCE THEREOF, THE INCOME TAX (FIFTH AMENDMENT) RULES 2008 HAS INSERTED A NEW RULE 8D IN THE I . T . RULES SO AS TO PROVIDE THE METHOD OF DETERMINING AMOUNT OF SUCH EXPENDITURE IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME . THE HON ' BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . CO. LTD . VS DCIT, 328 ITR 81 (BOM), HAS HELD THAT SECT I ON 14A(2) IS APPLICABLE FROM A . Y . 2007-08 AND RULE 8D IS APPLICABLE FROM A . Y . 2008-09 . 4.3 THERE CANNOT BE ANY INCOME WITHOUT ANY KIND OF EXPENSES, HOWEVER, SMALL IT MAY BE, HENCE THE ASSESSING OFFICER WAS JUSTIFIED IN CALCULATING THE DISALLOWANCE ON THE EXEMPTED INCOME. THE APPELLANT HAS UNDISPUTEDLY EARNED EXEMPT INCOME HENCE THE SEC.14A IS APPLICABLE WHERE IT PROVIDES THAT NO DED U C T I ON IN RESPECT OF EXPENDITURE INCURRED B Y THE ASSESSEE IN R ELAT I ON TO EXEMPTED INCOME WIL L BE A L LOWE D . TH E RE ARE E X PENSES INCURRED FOR EARN IN G THE EXEMP T I NCOME AS WE L L AS EAR N ING OF OTHER INCOMES . THE EXEMPT INCOME DOES I NVOLVE DIRECT AS WEL L AS IND I RECT EXPENSES AS IS ALSO EVI D ENT F R OM THE MATE R IAL ON RECORD . THE SEC 14A DOES NOT TAK E CARE OF ONLY DIRECT EXPENSES BUT IND I RECT EXPENSES ARE ALSO TO BE ALLOCATED , TO THE EXEMPTED INCOME . THE ASSESSING O F FICER HAS SPEC I FICALLY POINTED OUT TO THE EXPE N SES D IR ECTLY AS WE L L AS I NDIRECTLY I NCURRED FOR EARNING EXEMPT INCOME A N D THE APPELLANT HAS NOT BEEN ABLE TO CONT R OVERT THE FIND I NGS OF THE ASSESSING OFFICER OR HAS BROUGHT ANY SUCH MATERIAL WHICH IS CONTRARY TO THE FINDING OF THE ASSESSING OFFICER . I N THE CASE OF ACIT VS. CHAMP I ON COMMERCIAL CO LTD (2012) 139 ITD 108 (KOL) IT WAS HELD THAT A DISALLOWANCE U/S 14A CAN ALSO BE MADE IN A CASE IN WHICH THE ASSESSEE CLA I MS THAT NO EXPENDITURE HAS BEEN INCURRED FOR EARNING TAX EXEMPT INCOME . THE R EFORE , WHEN THE ASSESSEE DOES NOT OFFER ANY DISALLOWANCES U/S 14A ON HIS OWN , THE PROVISIONS OF SEC 14A (2) READ WITH RULE 80 CAN BE INVOKED WITHOUT THERE BE I NG ANY NEED TO EXPRESS SATISFACTION AND I NCORRECTNESS OF SUCH A C L A I M. THE EARN I NG OF DIV I DEND INCOME HAS EMANATED FROM THE INVESTMENTS MADE BY THE APPELLANT AND SO IS THE CASE WITH THE - EARNING OF SHARE OF PROFIT FROM FIRMS . FURTHER PROV I SION OF SEC 14A APPLY TO DISALLOW EXPENDITURE INCURRED ON EARNING SHARE INCOME OF A PARTNERSHIP FI R M AS WAS HELD BY THE SPECIAL BENCH OF AHEMDABAD ITAT I N THE CASE OF V I SHNU ANANT MAHAJAN VS. ACIT (2012) 1 6 ITR (TRIB) 621 (AHD) 147 TTJ 142 (AHD) SB, SIMILAR VIEW WAS EXPRESSED IN THE CASE OF HOSHANG D, NANAVATI VS ACIT (2012) 161 ITR 614 (TRIB)(MUM). 4.4. AT THIS JUNCTURE, I CONSIDER IT APPROPRIATE TO REPRODUCE RULE 8D OF THE IT RULES WHICH IS AS FOLLOWS : .......... 6 A P L A I N READING OF THE ABOVE RULE SHOWS THAT 8D(2) CAN BE APPL I ED I N THE PRESENT CASE . THE UNDISPUTED FACT REMAINS THAT THE APPEL L ANT IS IN RECEIPT OF I NCOME WHICH IS EXEMPT FROM TAX AND . NO EXPENDITURE CLAIMED I N EA R NING OF THE SAID INCOME . THE HON . BOMBAY . HIQH COURT IN THE CASE OF GODREJ & BOYCE, 328 . ITR 81 (BOM) AUTHORIZE THE ASSESSING OFF I CER TO R ECOMPUTE THE DISALLOWANCE U/S 14A AS PER PRESCRIBED METHOD ONLY IN CASE THE ASSESS I NG OFFICE R IS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE HAVING REGARD TO ITS ACCOUNTS . THE SAID PRINCIPLE HAS ALSO BEEN UPHELD BY THE ITAT MADRAS IN THE CASE OF MIS SIVA INDUSTRIES OF HOLDINGS LTD VS. ACIT (2011) 59 DTR (CHENNAI) (TRIB) 182 AND ALSO BY THE DELHI TRIBUNAL IN DCIT VS. M/S. JINDAL PHOTO LIMITED, ITA NO.814/DEL/2011 DATED 23.09.2011. THE ASSESSING OFFICER IN THE PRESENT CASE IS NOTICED TO BE NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AND FINDING NO EXPENDITURE HAVING BEEN INCURRED IN RELATION TO EXEMPT INCOME APPLIED RULE 8D FOR WORKING OUT THE DISALLOWANCE, WHICH APPEARS TO BE THE CORRECT METHOD ADOPTED BY THE AO. THE SATISFACTION AS TO NON-DISALLOWANCE OF EXPENSES AGAINST EXE M PT I NCO M E I S A N Y CASE D I SCE R NING FROM T H E OBSE R VAT I ON OF T H E A . O . T HE F AC T ON RECORD CLEARLY INDICAT E T H AT THE APPE L LAN T IS IN REC E I PT OF EXEMP T INCOME I N THE FORM OF DIVIDE N D A M O U NTING TO RS.11,293/- & SHARE P R OFIT OF RS . 25 , 39,71 , 856/ - AND THE APPELLANT HAD NO T MA D E AN Y DISALLOWANCE ULS 14A IN RESPECT OF THE EXPENSES R ELATABLE TO THE ABOVE EXE M PT INCOME, WHICH HAS EMANATED OUT OF THE INVESTMENTS OF THE APPELLANT . T HUS THE ISSUE I N , APPEAL LIES IS A VERY NARROW COMPASS OF UNDISPUTED MATERIAL F A CTS . THEREFO R E, IN PR I NCIPLE THE D I SA L LOWANCE, U/S 14A R . W . RULE 8D GETS ATTRACTE D AND THE SAME HAS BEEN RIGHTLY APPLIED BY THE AO WHILE WORKING OUT THE DISALLOWANCE. 4.5 SO FAR AS THE CONTENTION RAISED, BY THE APPELLANT OF IGNORING THE DEPRECIATION OF RS. 35 , 55,944/- FOR THE PURPOSE OF CALCULATING THE DISA L LOWANCE U/S 14A IT IS NOTICED THAT THE APPEL L ANT HAS INCURRED SELLING AND ADMINISTRATIVE EXPENSES OF RS. 12 , 09,989/ - AND INTEREST OF RS . 53,264/- TOTALING TO RS . 12,63,253/- AND THE DEPRECIATION CLAIMED IS OF RS . 35,55,944/ - . THE A . O . HAS TAKEN INTO CONSIDERATION THE DEPRECIATION AS AN EXPENSES I NCURRED BY THE APPELLANT FOR WORKING OUT THE DISALLOWANCE UNDER RULE 8D. SECTION 14A REFERS TO EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. HOWEVER, AS HELD BY THE TRIBUNAL AND ALSO THE SPECIAL BENCH, DEPRECIATION IS NOT AN EXPENDITURE BUT A STATUTORY ALLOWANCE GRANTED TO THE ASSESSEE ON COMPLIANCE OF CERTAIN CONDITIONS SUCH AS OWNERSHIP OF THE ASSETS, USE OF THE DEPRECIABLE ASSET FOR THE PURPOSE OF BUSINESS. THE DIFFERENCE BETWEEN 'EXPENDITURE' AND ALLOWANCE IS THAT EXPENDITURE IS INCU R RED VOLUNTARILY AND APPLYING THE JUDGEMENT WITH REGARD TO ITS USEFULNESS FOR BUSINESS AND ITS APPLICATION IN PRODUCING INCOME TO THE ASSESSEE WHEREAS 'ALLOWANCE ' IS GRANTED SUBJECT TO COMPLIANCE OF CERTAIN CONDITIONS AND SECTION 14A REFERS TO EXPENDITURE INCURRED AND NOT TO ALLOWABLE AS SUCH. THEREFORE, THE PROVISION OF SECTION 14A CANNOT BE APPLIED FOR MAKING DISALLOWANCE OF DEPRECIATION. IN THE DECISION OF MUMBAI ITAT IN THE CASE OF HOSHANG NANAVATI VS. ACIT (CITED SUPRA) ALSO RELIED UPON BY THE APPELLANT, THE BENCH HELD AS UNDER : 7 S. 14A PERMITS A DISALLOWANCE OF EXPENDITURE INCURRED BY THE ASSESSEE AND NOT OF ALLOWABLE ADMISSIBLE TO HIM. THERE IS A DISTINCTION BE T WEEN ' EXPEND I TURE ' AND ' AL L OWANCE '. T H E EXPRESS I ON ' EXPEND I TURE' DOE S NOT I N C L UD E AL L OW A N C ES SUCH AS D E PRE CI ATIO N ALLOWANCE . ACCO R D I N GLY , DEPREC I ATION CAN N OT BE THE SUBJECT MATTER O F DISAL L OWANCE U/S 14A . ' THE HONO U RABLE MUMBAI ITAT R ELIED ON THE SUPREME COURT JU D G M ENT IN THE CASE OF NECTA R BEVE R AGES 314 ITR 314 ( SC) , 4.6 FU R THER , THE SPECIAL BENCH OF ITA T AHMEDABAD IN THE CASE O F S HRI VISHNU ' ANAN T MAHAJAN VS ACIT (2012) 147 T TJ 142 (AHD) (SB), HAS UPHELD THE VIEW THAT DEP R ECIAT I ON IS NOT A N EXPENDITURE B U T A STATUTORY ALLOWANCE U/S 32 OF THE ACT AND , THEREFORE , THE PROVISIONS OF SECT I ON 14A A R E NOT APPLICABLE TO THE DEPRECIATION ALLOWANCE. THUS, FOR THE , DEPREC I AT I ON OF RS . 5 , 55,944/ - C L AIMED BY THE APPELLANT , THE PROVISIONS OF SECT I ON 14A CANNOT BE APPLIED WHI L E WORKING OUT THE DISALLOWANCE AND HENCE THE GROUND OF APPEAL R AISED BY THE APPEL L ANT IN THIS REGARD IS HELD TO BE ALLOWABLE. 4.7 FURTHE R THE APPELLANT HAS BROUGH T TO MY NOTICE THE DECIS I ON I N T HE CASE OF GILLETE GROUP IND I A P LTD VS ACIT CITED SUPRA WHEREIN THE DELHI ITAT HAS HELD THAT THE DISALLOWANCE U/S 14A CANNO T EXCEED THE EXPENDITURE ACTUALLY C L AIMED BY THE ASSESSEE . THE TR I BUNAL HELD AS UNDER : .. 4.8 IN VIEW OF THE RATIO OF THE ABOVE DECISION THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE WHICH IS RS.12,63,253/- AND THE REMAINING AMOUNT OF RS.26,06,330/- [38,69,583 12,63,253] IS DIRECTED TO BE DELETED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE FOR A.YS. 2008-09 TO 2010-11. THE CO-ORDINATE BENCH OF THE TRIBUNAL BY ORDER DT.08.01.2016 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HE PLACED ON RECORD THE COPY OF THE AFORESAID ORDER AND POINTED TO THE RELEVANT FINDINGS OF THE TRIBUNAL. HE FURTHER SUBMITTED THAT THERE ARE NO 8 CHANGES IN THE FACTS FOR THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEARS AND THEREFORE FOLLOWING THE ORDER OF EARLIER YEARS, THE ISSUE BE DECIDED IN FAVOUR OF THE ASSESSEE. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DISALLOWANCE U/S 14A R.W. RULE 8D OF THE ACT. WE FIND THAT IDENTICAL ISSUE AROSE IN THE CASE OF ASSESSEE IN A.YS. 2008-09 TO 2010-11 AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NOS.159 AND 577/PN/2014 ORDER DT.08.01.2016 BY HOLDING AS UNDER : 7.WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE. THE COMMON ISSUE RAISED IN THE APPEALS BY THE ASSESSEE AND THE REVENUE IS DISALLOWANCE U/S. 14A R.W. RULE 8D. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 14A AND THE RELIEF GRANTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) THEREON IS TABULATED HERE-IN-UNDER: DISALLOWANCE MADE BY THE ASSESSING OFFICER DISALLOWANCE CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) RELIEF GRANTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 2008-09 RS.18,94,440/- RS.7,38,579/- RS.11,55,861/- 2009-10 RS.38,69,583/- RS.12,63,253/- RS.26,06,330/- 2010-11 RS.45,85,031/- RS.16,19,035/- RS.29,65,996/- 8. THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEARS HAS EARNED INCOME FROM SHARE IN THE PARTNERSHIP FIRMS. THE SAID INCOME WAS CLAIMED BY THE ASSESSEE AS EXEMPT U/S. 10(2A) OF THE ACT. THE ASSESSEE HAS NOT DISALLOWED ANY EXPENDITURE IN RESPECT OF TAX FREE INCOME EARNED. AS PER THE CONTENTIONS OF THE ASSESSEE, THE ASSESSEE IS HAVING SUFFICIENT OWN INTEREST FREE FUNDS FOR MAKING INVESTMENT. THEREFORE, THE PROVISIONS OF RULE 8D WOULD NOT APPLY. THE LD. AR HAS FURTHER SUBMITTED THAT IN ANY CASE THE DISALLOWANCE CANNOT BE MORE THAN THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE LATTER SUBMISSION OF THE 9 ASSESSEE AND BY FOLLOWING THE TRIBUNALS DECISION RENDERED IN THE CASE OF GILLETTE GROUP INDIA (P.) LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA) RESTRICTED THE DISALLOWANCE U/S. 14A R.W. RULE 8D TO THE EXTENT OF TOTAL EXPENDITURE ACTUALLY CLAIMED IN THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT RECORDED THE SATISFACTION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14A(2) OF THE ACT, BEFORE INVOKING THE PROVISIONS OF RULE 8D. THE DEPARTMENT IS IN APPEAL AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN PARTLY DELETING THE DISALLOWANCE MADE U/S. 14A R.W. RULE 8D. 9. IT IS A TRITE LAW THAT INVOKING OF RULE 8D TO COMPUTE DISALLOWANCE U/S. 14A OF THE ACT IS NEITHER AUTOMATIC, NOR IT CAN BE INVOKED MERELY ON THE EXISTENCE OF A EXEMPT INCOME IN THE HANDS OF THE ASSESSEE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT REPORTED AS 328 ITR 81 (BOM) AND THE HON'BLE DELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD. & ORS. VS. CIT REPORTED AS 247 CTR 162 (DEL) HAS HELD THAT FOR APPLYING THE PROVISIONS OF SECTION 14A R.W. RULE 8D THERE HAS TO BE A PROXIMATE CAUSE FOR DISALLOWANCE BETWEEN TAX EXEMPT INCOME AND THE EXPENDITURE. IT IS A WELL SETTLED LAW THAT THE BURDEN IS ON THE ASSESSING OFFICER TO PROVE NEXUS BETWEEN THE EXPENDITURE DISALLOWED AND NON-TAXABLE INCOME. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF WIMCO SEEDLINGS LTD. VS. DCIT REPORTED AS 293 ITR 216 HAS HELD THAT ONLY EXPENDITURE FACTUALLY INCURRED ON NONTAXABLE RECEIPT IS TO BE DISALLOWED. EXPENDITURE ASSUMED OR DEEM TO BE INCURRED ON NON-TAXABLE RECEIPT CANNOT BE DISALLOWED. THE BURDEN IS ON THE ASSESSING OFFICER TO PROVE THE NEXUS BETWEEN THE EXPENDITURE DISALLOWED AND NON-TAXABLE RECEIPTS UNDER THE PROVISIONS OF SECTION 14A OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF ACIT VS. EICHER LTD. REPORTED AS 101 TTJ 369 (DELHI). 10. IN THE PRESENT CASE THE CONTENTIONS OF THE ASSESSEE IS THAT THE ASSESSEE IS HAVING SUFFICIENT OWN INTEREST FREE FUNDS. THE INVESTMENTS ARE MADE IN THE PARTNERSHIP FIRMS FROM INTEREST INCOME, REMUNERATION RECEIVED FROM THE PARTNERSHIP FIRMS AND SHARE OF PROFITS. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS HAS ALSO PLACED ON RECORD THE DETAILS OF INVESTMENT IN PARTNERSHIP FIRM, CAPITAL ACCOUNT AND LOANS AND BORROWINGS FOR ALL THE THREE IMPUGNED ASSESSMENT YEARS. A PERUSAL OF THE SAME SHOWS THAT THE ASSESSEE IS HAVING SUFFICIENT OWN INTEREST FREE FUNDS FOR MAKING INVESTMENTS. THE DETAILS OF THE INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT OF THE ASSESSEE AND LOANS AND BORROWINGS FURNISHED BY THE LD. AR BEFORE THE TRIBUNAL ARE REPRODUCED HERE-IN- BELOW FOR READY REFERENCE: FIGS IN LACS FINANCIAL YEAR 2007-08 (A.Y. 2008-09) DETAILS OF INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT AND LOANS AND BORROWINGS 01.04.2007 31.03.2008 SR. NO. PARTICULARS RS. RS. RS. RS. 1. INVESTMENT IN PARTNERSHIP FIRMS 1129.30 6270.41 2.CAPITAL ACCOUNT 3167.05 8738.38 10 3.LOANS AND BORROWINGS 528.71 452.33 A) INTEREST FREE UNSECURED LOANS 446.16 385.19 B) SECURED LOANS FROM BANKS I) HOME LOAN 39.81 30.71 II) CAR LOAN 42.74 36.43 4. LANDS (CURRENT ASSETS) 2067.95 1779.35 ___________________________________________________________________________ DETAILS OF INVESTMENTS IN PARTNERSHIP FIRMS SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 1129.30 2. ADD : 5336.53 SHARE IN FIRMS LAND REVALUATION 2022.18 SHARE IN INCOME FROM PARTNERSHIP FIRMS 3314.35 ____________ 6465.83 3. CAPITAL CONTRIBUTION WITHDRAWN FROM THE PARTNERSHIP FIRMS 195.42 4. CLOSING BALANCE 6270.41 DETAILS OF CAPITAL ACCOUNT SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 3167.05 2. ADD : 5977.22 SHARE IN FIRMS LAND REVALUATION 2022.18 NET PROFIT MADE DURING THE YEAR 3955.04 ___________ 9144.27 3. LESS WITHDRAWAL 405.89 4. CLOSING BALANCE 8738.38 FIGS IN LACS FINANCIAL YEAR 2008-09 (A.Y. 2009-10) DETAILS OF INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT AND LOANS AND BORROWINGS 01.04.2008 31.03.2009 SR. NO. PARTICULARS RS. RS. RS. RS. 1. INVESTMENT IN PARTNERSHIP FIRMS 6270.41 8995.43 2. CAPITAL ACCOUNT 8738.38 11646.52 3. LOANS AND BORROWINGS 452.33 345.98 A) INTEREST FREE UNSECURED LOAN 385.19 239.19 B) SECURED LOANS FROM BANKS I) HOME LOAN 30.71 20.52 II) CAR LOAN 42.74 86.27 4. LANDS (CURRENT ASSETS) 1779.35 1515.99 ___________________________________________________________________________ 11 DETAILS OF INVESTMENTS IN PARTNERSHIP FIRMS SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 6270.41 2. ADD : 2552.46 SHARE IN FIRMS LAND REVALUATION 2552.46 ____________ 6465.83 3. CAPITAL CONTRIBUTION WITHDRAWN FROM THE PARTNERSHIP FIRMS -172.56 4. CLOSING BALANCE 8995.43 DETAILS OF CAPITAL ACCOUNT SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 8738.38 2. ADD : 3019.97 NET PROFIT MADE DURING THE YEAR 3019.97 ____________ 11758.35 3. LESS WITHDRAWAL 111.83 4. CLOSING BALANCE 11646.52 FIGS IN LACS FINANCIAL YEAR 2009-10 (A.Y. 2010-11) DETAILS OF INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT AND LOANS AND BORROWINGS 01.04.2009 31.03.2010 SR. NO. PARTICULARS RS. RS. RS. RS. 1. INVESTMENT IN PARTNERSHIP FIRMS 8995.43 8364.14 2. CAPITAL ACCOUNT 11646.52 13825.95 3. LOANS AND BORROWIN 345.98 215.55 A) INTEREST FREE UNSECURED LOAN 239.19 165.44 B) SECURED LOANS FROM BANKS I) HOME LOAN 20.52 9.19 II) CAR LOAN 86.27 40.92 4. LANDS (CURRENT ASSETS) 1779.35 1228.73 ___________________________________________________________________________ DETAILS OF INVESTMENTS IN PARTNERSHIP FIRMS SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 8995.43 2. ADD : 4027.74 SHARE IN INCOME FROM PARTNERSHIP FIRM 4027.7 ---------------- 13023.17 3. REVERSAL OF SHARE IN FIRMS LAND REVALUATION 2022.2 4. CAPITAL CONTRIBUTION WITHDRAWN FROM THE 12 PARTNERSHIP FIRMS 2636.85 4659.03 4. CLOSING BALANCE 8364.14 DETAILS OF CAPITAL ACCOUNT SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 11646.52 2. ADD : 5135.27 NET PROFIT MADE DURING THE YEAR 5135.3 ____________ 16781.79 3. LESS: REVERSAL OF SHARE IN FIRMS LAND REVALUATION 2022.2 WITHDRAWAL 33.65 4. CLOSING BALANCE 13825.95 A PERUSAL OF THE ABOVE TABLES WOULD SHOW THAT THE ASSESSEE HAS NOT TAKEN ANY LOANS FOR INVESTMENT PURPOSE. THE LOANS ARE TAKEN FOR PERSONAL AND SPECIFIC PURPOSE VIZ. CAR LOAN AND HOUSE LOAN. THUS, IT IS EVIDENT THAT INTEREST BEARING FUNDS WERE NOT UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF INVESTMENT. THE LD. DR HAS NOT CONTROVERTED THE ABOVE INFORMATION FURNISHED BY THE ASSESSEE. 11. ALTHOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS STATED THAT HE IS NOT SATISFIED WITH THE WORKING OF DISALLOWANCE BY THE ASSESSEE, HOWEVER, THE SAID OBSERVATIONS OF THE ASSESSING OFFICER ARE NOT SUBSTANTIATED BY ANY COGENT REASON. A MERE BALD ASSERTION WITHOUT ANY OBJECTIVE ANALYSIS OF THE ACCOUNTS BY THE ASSESSING OFFICER IS MEANINGLESS. THE ROAD TO RULE 8D PASSES THROUGH SUB-SECTION (2) OF SECTION 14A OF THE ACT. A PERUSAL OF SUB- SECTION (2) WOULD SHOW THAT THE ASSESSING OFFICER HAS TO RECORD HIS SATISFACTION WITH REGARD TO THE ACCOUNTS OF THE ASSESSEE. IF THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE THEN ONLY THE PROVISIONS OF RULE 8D CAN BE INVOKED. IN THE PRESENT CASE NO SUCH SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER AFTER ANALYZING THE ACCOUNTS OF THE ASSESSEE. OUR THIS VIEW IS SUPPORTED BY THE DECISION OF CO- ORDINATE BENCH IN THE CASE OF ASSTT. COMMISSIONER OF INCOME TAX VS. M/S. MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION COMPANY LTD. (SUPRA). THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL READS AS UNDER: 10. PERTINENTLY, WE FIND NO SUCH REASONS TO DISTRACT FROM THE AFORESAID FINDINGS OF THE CIT(A) WHICH ARE CLEARLY BORNE OUT BY THE MATERIAL ON RECORD. IN-FACT, DISCUSSION IN THE ASSESSMENT ORDER, WHICH HAS BEEN REFERRED TO BY THE LEARNED CIT-DR BEFORE US DOES NOT SHOW AS TO HOW THE CATEGORICAL ASSERTIONS OF THE CIT(A) ARE WRONG. THOUGH, THE ASSESSING OFFICER DOES SAY THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF EXPENDITURE MADE BY THE ASSESSEE SO HOWEVER, THE SAME IS MERELY A BALD ASSERTION, DEVOID OF ANY OBJECTIVE ANALYSIS OF THE ACCOUNTS MAINTAINED 13 BY THE ASSESSEE, A MANDATORY REQUIREMENT OF SUB-SECTION (2) OF SECTION 14A OF THE ACT. THEREFORE, IN THE ABSENCE OF ADHERENCE TO THE REQUIREMENTS OF SECTION 14A(2) OF THE ACT, THE ASSESSING OFFICER COULD NOT HAVE PROCEEDED TO INVOKE RULE 8D OF THE RULES AND SUBJECT THE IMPUGNED INTEREST EXPENDITURE FOR DISALLOWANCE AS PER CLAUSE (II) OF RULE 8D OF THE RULES. SIMILARLY, THE CIT(A) RECORDS ANOTHER FINDING WHICH IS TO THE EFFECT THAT THE DIVIDEND RECEIPT HAS BEEN DIRECTLY CREDITED INTO THE BANK ACCOUNT OF THE ASSESSEE, THUS LEAVING NO SCOPE FOR INCURRING ANY OTHER EXPENSES FOR EARNING EXEMPT INCOME BY THE ASSESSEE. FOR THE SAID REASON, THE INDIRECT EXPENDITURE SOUGHT TO BE DISALLOWED BY INVOKING CLAUSE (III) TO SUB-RULE (2) OF RULE 8D OF THE RULES HAS ALSO BEEN FAULTED BY THE CIT(A). ON THIS ASPECT, WE ARE IN AGREEMENT WITH THE CIT(A) THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING RULE 8D OF THE RULES IN ORDER TO COMPUTE THE DISALLOWANCE U/S 14A(1) OF THE ACT. IN VIEW OF THE AFORESAID DISCUSSION, WE HEREBY AFFIRM THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE OF RS.20,66,011/- MADE BY THE ASSESSING OFFICER INVOKING SECTION 14A OF THE ACT. THUS, ON THIS ASPECT, REVENUE FAILS AND ACCORDINGLY THE GROUNDS OF APPEAL NO.1 TO 3 ARE DISMISSED. 12. ANOTHER FACET WHICH HAS TO CONSIDER BEFORE INVOKING RULE 8D IS SUFFICIENT AVAILABILITY OF INTEREST FREE FUNDS. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. RELIANCE UTILITIES AND POWER LTD. (SUPRA) HAS HELD THAT IF SUFFICIENT INTEREST- FREE FUNDS ARE AVAILABLE WITH THE ASSESSEE TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST-FREE FUNDS AVAILABLE. THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD. (SUPRA) HAS HELD THAT WHERE ASSESSEES CAPITAL, PROFIT RESERVES, SURPLUS AND CURRENT ACCOUNT DEPOSITS WERE HIGHER THAN THE INVESTMENT IN TAX-FREE SECURITIES IT WOULD HAVE TO BE PRESUMED THAT INVESTMENT MADE BY THE ASSESSEE WOULD BE OUT OF THE INTEREST FREE FUNDS AVAILABLE WITH ASSESSEE AND NO DISALLOWANCE IS WARRANTED U/S. 14A. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE LAW LAID DOWN BY THE HON'BLE HIGH COURTS AS DISCUSSED ABOVE WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE MADE U/S. 14A R.W. RULE 8D IS NOT SUSTAINABLE AND IS LIABLE TO BE SET ASIDE. ACCORDINGLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE CORRESPONDING GROUND ASSAILING THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE DISALLOWANCE U/S. 14A R.W. RULE 8D IN THE APPEALS BY THE DEPARTMENT ARE REJECTED. BEFORE US, REVENUE HAS NOT POINTED OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE AND THAT OF THE EARLIER YEARS NOR HAS PLACED ANY MATERIAL ON RECORD TO SHOW THAT THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS HAS BEEN SET ASIDE OR STAYED BY HIGHER JUDICIAL AUTHORITIES. WE THEREFORE FOLLOWING THE REASONING OF THE CO-ORDINATE BENCH OF THE 14 TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS ARE OF THE VIEW THAT IN THE PRESENT CASE, NO DISALLOWANCE U/S 14A IS CALLED FOR. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 16 TH DAY OF OCTOBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 16 TH OCTOBER, 2017. YAMINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-II, PUNE. CIT-II, PUNE. , , / DR, ITAT, B PUNE; [ / GUARD FILE. / BY ORDER // TRUE COPY // // / SR. PRIVATE SECRETARY , / ITAT, PUNE.